Sona Comstar Q3 Results Review - Upward Revision In Ebitda Margin Guidance: Yes Securities

Yes Securities Report

Sona BLW Precision Forgings Ltd.'s Q3 FY24 results were better as Ebitda/profit after tax exceeded our estimates by 11-13%, led by better than expected Ebitda margins at 29.7% (estimate 27.4%, plus 180 basis points QoQ, 13 quarter high). This was led by operational efficiencies and benign raw material costs.

We believe the operating performance were healthy given United Automobile Workers strike led to Rs 250 million revenue impact in October 2023, which is now resolved and will partially reverse in Q4 FY24. On the positive side, the key highlight of the quarter was,

1. the new order wins for Integrated Motor Controller for electric vehicle two wheeler segment and

2. upward revision in Ebitda margins guidance to 28% plus in the near term (versus earlier guidance of 25-27%).

Adjusted New order addition came in healthy at ~Rs 20 billion (versus Rs 13 billion/Rs 5 billion/Rs 42 billion/Rs 4 billion/Rs 28 billion/Rs 6 billion orders added in previous six quarters).

Sona Comstar’s overall orderbook stands at Rs 240 billion (versus Rs 221 billion QoQ and Rs 215 billion/Rs 186 billion in FY23/FY22). Sona’s EV revenue mix during Q3 FY24 were at 30% (versus 27%/26% in Q2 FY24/Q1 FY24).

The management guided majority of new programs would go into production in one-two quarters. On the other hand, with raw material headwinds receding, coupled with benefits of operating leverage should help margins expansion over FY23-25E.

Hence, we expect revenue/Ebitda/Adjusted profit after tax to grow 27-42% compound annual growth rate over FY24-26E.

We haven’t change our FY24E/25E earning per share and have maintained an 'Add' on the stock with target price at Rs 684 (unchanged) given limited upside led by recent valuations expansion.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.